Manulife explains the highs and lows of recent financial performance

“In fact, since the beginning of the year, our segments in Canada and the USA have shown double figures [new business value] growth due to increased sales and improved margins,” added Hori.

Canada delivered an 8.5% increase in core earnings in the second quarter of 2022, to C$345 million, compared to C$314 million in the same period last year. Gorey said this growth primarily reflected a favorable experience in the individual insurance and annuity business, as well as higher earnings in their insurance business.

Canadian annualized premium equivalent (APE) sales increased 32% to C$361 million compared to C$271 million in the second quarter of 2021, primarily driven by higher group and individual insurance sales, partially offset by lower segregated fund sales. Manulife noted improvements to its Canadian website, including artificial intelligence and natural language processing to improve product search capabilities.

“We continue to make progress on our digital journey and our strong digital capabilities and investments, which have totaled more than $850 million since 2018,” Gorey said on the earnings call.

The US, meanwhile, had lower underlying profit mainly due to a variable annuity (VA) reinsurance deal that was closed in the first quarter. Excluding the transaction, underlying earnings would have increased 2%, Manulife said.

US operations benefited from improved margins, increased international sales and higher interest rates. New business value (NBV) growth was 32%. International sales hit a record high in the second quarter, up 43% over the first year.

“Overall, our global footprint, diversified business mix, focus on operational resilience and proven digital capabilities have uniquely positioned us to continue to deliver strong performance over the long term,” said Gorey.

Agency problems in Asia

A sharp decline in Manulife’s sales force in Asia was one of the factors contributing to the region’s low sales. The number of agents in the “Other Asia” category, which includes mainland China, Singapore, Vietnam and other emerging markets, fell 17% to 86,329 in the second quarter from 101,045 in the previous quarter.

The Toronto-based insurer attributed the decline to the lingering effects of the pandemic, a continued push to professionalize agencies and the introduction of new products and sales rules in China. But Manulife said it sees those as “short-term factors.”

According to Manulife Asia chief executive Damien Green, the change in workforce dynamics has affected hiring during the pandemic in China and Vietnam. “We have seen people return to their home provinces to support their families during the last waves of the pandemic. But we expect recruitment to normalize when markets recover,” he explained.

“We have a diversified, multi-channel, multi-segment franchise that, through multiple channels — from private banks to international high net worth brokers to mass market agency — gives us access to customer segments, high-value, high-growth customer segments,” Green said of the Asian segment.

Ghori emphasized that Manulife focuses on the quality, not the size, of its agent force. “Over the past two and a half years, we have seen a 23% CAGR increase in MDRT (Million Dollar Round Table), which is a recognized indicator of the quality of the agency’s forces, compared to pre-pandemic levels,” the CEO noted. The Million Dollar Round Table is a global association of the world’s leading life insurance and financial services professionals from more than 500 companies.

“Quality matters more and we are seeing tremendous growth in the quality of our agencies. Diversifying our channel mix is ​​another strength of ours,” Ghori told stakeholders on the earnings call.

Flexible position

Looking ahead, Manulife said it expects improvements as Asia and the rest of the world emerge from the pandemic. Green said they remain confident of achieving their medium-term profit growth target of 15% despite the current challenges.

“While our profitability and growth performance has been impacted by a challenging macro environment, our global strengths and diversity continue to provide significant compensation,” said Manulife Chief Financial Officer Phil Wetherington. “Our balance sheet remains strong and provides us with the financial flexibility to meet our strategic and capital deployment priorities.”

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